In this time of uncertainty in the investment world, we’ve seen wealth grow and fall many times. Everyone, from digital moguls in Silicon Valley to traditional manufacturing giants, from financial elites on Wall Street to investors in emerging markets, is looking for that investing code that can work in all market conditions.

Today I’ll share some serious thoughts regarding the present North American market and what these changes mean for how we manage our clients’ money.

A lot of investors were surprised by the chaos in the North American market in April of this year. But if we look at it more closely, we see that the main reason for this move wasn’t a decline in economic fundamentals, but rather big changes in the policy environment.
For the last thirty years, policy has been like a “guardian angel” for the market. Whenever the markets were unstable, authorities would quickly step in to add things that would stabilize the market. When the economy was relatively stable, new policy initiatives usually had a small positive effect on markets. But this time, things were different.

Even while policy-driven changes in the market don’t happen very often, history shows that they usually happen swiftly and then go away just as quickly. When the regulations change, the markets go back to normal. Most curiously, economic fundamentals and policy-induced corrections often go in opposite directions, even though economic data usually stays strong for a while.

Short-term volatility typically gives high-net-worth investors chances to move their assets around. Policy changes usually have an effect that goes in cycles, so there’s no need to panic too much. Good investors often keep enough cash on hand and are ready to buy good assets when the market corrects itself.

We should pay closer attention to small changes in how people act that are underneath the surface of the economy.
The current economic statistics looks good, but a closer look shows several problems. “Tariff uncertainty” may have made the current state of the economy and corporate profits look better than they really are.

For example, look at the first quarter: The amount of transportation in the U.S. went grown a lot, which caused industrial output and consumption data to go up as well. But most of this rise came from firms and individuals racing to stock up on items because they were worried about possible levies. This could also happen in container shipping and industrial work.

Statistics collected every day show that Americans who use credit and debit cards spend 2.4% more than they did a year ago. But if we look more closely, we see that the “physical goods” consumption category, which includes electronics, cars, and department shops, is what really made the numbers go up. On the other hand, areas of leisure consumption including travel and lodging have not yet shown indications of recovery.

Smart investors should pay attention to this change in the structure of consumption. After a short-term spike in demand, sectors that deal with physical items may see a drop in business. On the other hand, sectors that deal with services, especially high-end services, may have chances to regain their value.

Meanwhile, accommodation data shows another interesting change: lower-income groups have become more frugal over the past year because of inflation, whereas higher-income groups’ spending has stayed about the same. The most recent figures, on the other hand, reveal that even high-end hotels are starting to see fewer guests. This suggests that the drop in consumption has moved from the lowest-income groups to the highest-income ones.

This trend of consumers downgrading may continue, but it also opens up new investment options for wealthy investors. In the future, it will be vital to make changes to your portfolio by focusing on excellent brands and firms that offer “value for money” and avoiding investments that rely too much on high-end consumption.

Credit market data gives us a better picture of what’s going on than just looking at changes in consumption. A lot of people in North America stopped using cash and started using credit cards after the epidemic. This led to a big rise in credit card debt. However, the number of people who use credit cards has recently started to go down, which could mean that people are getting close to their “breaking point.”

The surge in default rates, especially on credit cards and vehicle loans, is more worrying. Credit card default rates are getting close to their highest levels since the financial crisis, but mortgage default rates are still rather low. These signs are developing at a time when the economy has not yet entered a recession and the job market is still strong. This shows that the pressure from high interest rates and inflation is slowly building up.

Changes like this have made it necessary to quickly shift investment strategies.

People used to say that Americans “earned a dollar and spent a dollar twenty,” but this “advance spending power” is going away. This trend is starting to show up even though wages are rising and the labour market is doing well. It raises crucial questions that need to be answered.

Neither long-term government market stimulus nor uncertainty about policy has been able to stop the decrease in consumption momentum. At the very least, this means that people who buy in stocks should be more “selective.” It can also mean that the economy will grow more slowly in the next several months or quarters.

This means that for investment portfolios, you should focus on high-quality consumer products firms that can set their own prices and stay away from company models that rely too much on consumer borrowing. In this situation, the old idea that “real estate investment, term deposits, and bank wealth management products are the safest bets” needs to be changed.
We also need to look at the core idea behind asset allocation again at the same time.

In today’s world, high-net-worth investors should keep enough cash on hand to deal with volatility and take advantage of opportunities when the market corrects itself. It’s important to strengthen position management, minimize over-concentration, and be flexible.

Diversifying your investments means more than just spreading them out over different sectors and locations. You also need to pay attention to how you spread them out over different asset classes. Long-term investors need to go back to the basic premise of focusing on quality asset allocation techniques and finding actual value in volatility in these chaotic markets.

We need to find assurance in ambiguity as we move forward.

There will be ups and downs in the market in the next few months, but investors shouldn’t freak out over it. This is actually a great time to look over your portfolios again and make sure your assets are in the best places.

In some situations, it could make sense to raise the percentage of defensive assets, including quality bonds and gold. Look for sectors and firms that will do well because of policy changes, and look for good growth stocks that have been wrongfully sold during corrections. When the market is in a panic, smart investors can frequently keep calm, and when others are greedy, they may stay cautious.

Building an investment system that lasts beyond cycles is important in the long run.

Market emotions are often loud and out of control, but good techniques have always worked in the past. For wealthy investors, the most precious asset is not a product or choice, but a reliable advisor—a partner who cares about their customers’ needs and is willing to go through tough times with them and their families while looking for better alternatives.